Valero admits plans for East Bay refinery to burn tar sands oil

Benicia – Valero Energy Corp. could use a new rail terminal it plans to build at its San Francisco Bay Area refinery to process highly flammable Bakken crude from Montana.

Valero Energy Corp. could use a new rail terminal it plans to build at its San Francisco Bay Area refinery to process highly flammable Bakken crude from Montana.

Valero conceded that possibility for the first time Monday at a community meeting called by the city-sponsored Valero Community Advisory Panel, according to San Francisco television station KPIX.

“If Bakken crude is one of the crudes that’s available by rail, it’s possible that it could make its way to our plant,” Valero spokesman Chris Howe told KPIX reporter Christin Ayers at Monday’s meeting.

Valero had previous said only that it wanted to begin bringing in crude oil by train to add to the resources available to its refinery in Benicia, Calif., on the shore of Suisun Bay.

Valero’s Don Couffle also told KPIX that the refinery also could choose to bring in oil derived from Canadian tar sands, similar to the fuel that leveled a major part of a Canadian coastal town last year, killing 47 people.

“Crude oil that’s derived from tar sands may be a candidate if it fits our profile,” Couffle said.

The refinery already brings in more than 100,000 barrels of crude daily by ship and pipeline.

Valero proposed the rail facility last year but the city, which must decide whether to allow it, required the company to prepare an extensive environmental impact report before it could be approved.

In theory, the project still could be derailed it the report uncovers unanticipated negative environmental consequences.

But Valero’s proposal has stirred up considerable outrage in the small, historic community, where project opponents have organized meetings of their own and threatened protests.

Nearly 200 residents jammed Monday night’s meeting at a union hall less than a half-mile from the refinery.

Several attendees spoke in favor of the rail project, which has been projected to add 20 permanent jobs to the refinery’s workforce and as many as 100 temporary jobs while the facilities are constructed.

Company officials presented the project to the audience and then answered questions from attendees.

Valero said shipments of up to 100 tanks cars filled with crude oil every day would not affect air quality, and that all safety standards would be met.

The additional oil by rail would not increase refinery production, the company said, because it would merely replace crude currently brought by ship.

“It would not increase crude delivery, just make it more flexible,” said John Hill, the refinery’s vice president and general manager.

But many local residents and newly formed community groups complain that the rail shipments added an extra layer of danger to the community.

New lab test shows Bakken crude may be less dangerous than earlier data suggest

By Cezary Podkul NEW YORK Feb 26, 2014

Feb 26 (Reuters) – A study of a fresh sample of crude oil from the Bakken shale in North Dakota published this week showed sharply lower levels of volatile vapors compared to previous tests, potentially raising new questions about the danger of shipping it by rail.

The latest data from Marathon Petroleum’s Capline Pipeline unit, which publishes so-called “assays” on the quality of over 100 types of crude on its website, showed a sharp fall in the oil’s vapor pressure, a common measure of a fuel’s ability to evaporate and give off combustible gases.

While the data offers only a single snapshot of the properties for a batch of so-called “North Dakota Sweet”, a term for Bakken crude, it may raise more questions about the combustibility of the oil, which has been cited in several fiery derailments in recent months.

The data emerges just as U.S. regulators impose new rules requiring more testing of Bakken crude for fear it is prone to explosion during accidents. Industry officials are appearing before a House committee in Washington on Wednesday to discuss the issue.

Capline’s latest Bakken assay, dated 14 January, was posted on its website this week, shortly after a Wall Street Journal story on Monday used older Capline data to show Bakken crude carries more combustible gases than other varieties. While Bakken’s ultra-light properties are generally well known, hard data is rarely made public.

Regulators are seeking more information on Bakken crude from oil shippers and are also conducting their own data collection and sampling. It is not clear when or if those results will be released.

Capline’s newest test showed a vapor pressure reading of 5.94 pounds per square inch (psi). The reading compares with a psi of 8.75 for a test done in February 2013 and is nearly 4 pounds per square inch lower than the highest reading, 9.7 psi, recorded by Capline in December 2010. A higher psi reading generally indicates a liquid fuel is more prone to give off combustible gases.

It was not clear why the rate had declined so sharply, or whether that decline is broadly reflective of the region as a whole. One expert who reviewed the data said the wide fluctuation appeared unusual, but not conclusive of any trend.

“I would expect it to go up and down, it’s going to vary, but that’s a big drop,” Connie M. Hendrickson, chemist with Arkon Consultants in Dallas, Texas, told Reuters. “Without extra sampling and extra testing, we just don’t know.”

A spokesman for Marathon declined to comment on the decrease, other than to say the firm has “a process in place to test crude oil for quality oversight purposes”. The samples are generally taken at the same spot on the pipeline, the spokesman said.

It is not clear how much Bakken runs through the Capline, a 1.3 million barrels-per-day (bpd) pipeline running north from St. James, Louisiana, to Illinois. The Marathon spokesman declined to provide operating rates for the pipeline.

To be sure, Capline’s latest data still show Bakken crude ranks higher in volatility than most other crudes, based on vapor pressure tests conducted by the company. At the 5.94 psi, for example, Capline’s latest Bakken sample still ranks more than double that of Light Louisiana Sweet crude, which tested at 2.38 psi in May 2013.

Still, the wider range of readings and the infrequency of the testing suggests there remains much uncertainty about the quality of Bakken crude.

Other data sets have suggested not only that the crude is light by its nature – Bakken reserves are rich in so-called “light ends” like butane, propane and other byproducts of petroleum – but that it is also growing lighter.

Refiner Tesoro Corp. said in a 2013 presentation that its purchases of crude sourced from North Dakota’s Bakken region have increased in volatility, topping readings of 12 psi in 2013.

Some lawmakers have asked for more data to aid regulatory efforts on this issue.

“It is not in anyone’s best interest to knee-jerk a response without data,” North Dakota Senator Heidi Heitkamp said in an interview this week.

Phillips 66 plans to build San Luis Obispo County rail terminal

The terminal would send trains with up to 80 tank cars of crude oil through Southern California and the Bay Area to Phillips’ Santa Maria Refinery.

November 26, 2013 | By Ralph Vartabedian

Phillips 66, which operates refineries across California, is moving forward with a plan to build a rail terminal in San Luis Obispo County that would send trains with up to 80 tank cars of crude oil through Southern California and the Bay Area.

In a draft environmental impact statement filed this week, Phillips said it wants to build five sets of parallel tracks that would accommodate trains as often as 250 times per year at its Santa Maria Refinery.

The project is the latest effort by the refinery industry to increase crude imports to California from oil fields in North Dakota, Colorado and Texas. There are no pipelines that can transport large amounts of oil to the West Coast.

Earlier, Valero Energy Corp. disclosed a plan to build a rail facility at its refinery in the Bay Area, and industry analysts expect that an oil rail facility will be built somewhere in the Central Valley.

While the amount of crude moving by rail throughout North America has been on a sharp rise over the last five years, the trend had not attracted a great of public attention until this summer, when a runaway train with 70 tank cars full of crude derailed in the Canadian town of Lac-Megantic, Quebec, killing 42 residents and destroying much of the downtown.

Since then, two other derailments of crude trains have occurred, and the Federal Railroad Administration issued an emergency order to improve safety. The Pipeline and Hazardous Materials Safety Administration, an agency of the U.S. Transportation Department, has taken initial steps to strengthen tank car safety.

More than 200,000 barrels a month of crude have been imported into California by rail as recently as this summer, a fourfold increase from the prior year.

Until now, California has gotten most of its crude from Alaska or foreign nations via tanker ships, or from the state’s own oil patches via a network of pipelines.

Dean Acosta, a Phillips 66 spokesman, said the project will “enable rail delivery of crude oil from other North American sources because the refinery’s traditional supply of crude oil from California fields is declining.”

The new Philips terminal, located 21/4 miles from the Pacific Ocean near the town of Nipomo, would be connected to Union Pacific’s coastal line that runs from downtown Los Angeles north to the Bay Area.

A Union Pacific spokesman said its transportation of crude would meet federal laws and industry standards.

The environmental impact statement indicates that the mostly likely source of crude for the rail terminal would be North Dakota’s Bakken Field, suggesting that more trains would run southbound from the Bay Area than northbound from Los Angeles.

Phillips is also seeking approval to increase the output of the Santa Maria Refinery by 10%, which is under review by the California Coastal Commission. The plant sends partially refined oil to one of Phillips’ main refineries in the Bay Area by a 200-mile pipeline.

The impact statement acknowledges some safety and environmental issues with the new rail facility.

“The main hazards associated with the Rail Spur Project are potential accidents at the [Santa Maria Refinery] and along the [Union Pacific] mainline that could result in oil spills, fires and explosions,” the report said.

But it added that an analysis of the risks of a fire or explosion along the railroad’s main line found the risk to be “less than significant.”

“Our new crude-by-rail fleet is constructed to meet or exceed the latest Assn. of American Railroads safety standards,” Phillips spokesman Acosta said.

The report also found the crude trains would increase air pollutants such as nitrogen oxides. “Operational pollutant emissions within San Luis Obispo County could be potentially significant and unavoidable,” it said.

Murray Wilson, a San Luis Obispo planning department official, said the project has received both local support and opposition. The extent of public opinion should become clearer during the 60-day public comment period that opened this week.